Jobs, Hiring, and Layoffs: Where Does the Labor Market Stand?

Initial applications for unemployment benefits fell close to a seven-year low last week; the last time initial claims were this low was before the start of the Great Recession, on May 12, 2007, when they measured 297,000. Last week also saw the largest decline in claims since late 2012.

Data released by the Department of Labor on Thursday showed that the number of Americans filing new jobless claims declined by 32,000 to a seasonally adjusted 300,000 in the week ended April 5, completely reversing the previous week’s 22,000-claim gain. More importantly, this drop — which surpassed analysts’ estimates for a 12,000-claim decline — confirmed that employers are holding onto workers as expectations for greater economic growth become stronger. Current jobless claim numbers are “collaborating with the other signals we have been seeing, which is the jobs market is slowly improving,” Moody’s Analytics senior economist Ryan Sweet told Reuters. But also, “some of the drop is normalizing from this winter’s depressive effect.”

Jobless claims are now trending in line with pre-recession levels; before the recession began in December 2007, an average number of 320,000 initial claims were filed each week due to the normal churn in the job market. And, more significantly, economists say any claims figure below 350,000 indicates moderate job creation.

Mirroring the decrease in weekly initial applications for unemployment benefits was the corresponding decline in the monthly average. Jobless claims provide the first look at the employment situation for any given month, but since the weekly figures can be volatile, economists use the four-week moving average to understand wider trends in employment, which are far more telling of labor market health than weekly readings. Falling by 4,750 from the previous week’s upwardly revised 321,000, the four-week moving average for the week ended April 5 dipped to 316,250.